RBA Shocks Markets by Increasing Official Interest Rate to 3.85%

The Reserve Bank of Australia (RBA) has resumed raising interest rates, taking the cash rate target from 3.6 to 3.85 per cent. This marks the 11th rate increase in a year and the highest rate since May 2012.

A Surprise Move on the Interest Rate

The unexpected move surprised traders, with the market only anticipating a 13 per cent chance of a rate rise. Following the announcement, the Australian dollar rose over half a cent, trading at around 66.9 US cents. While most major bank economists predicted the rate to remain steady, two had forecasted that it had reached its peak at 3.6 per cent.

RBA Governor Philip Lowe said the strong jobs and inflation data meant the bank had more work to do to control price rises, despite most market economists interpreting last week’s inflation figures as giving the RBA scope to maintain rates.

According to Mr. Lowe, although the cost of imported goods is decreasing due to the easing of supply chain disruptions, the cost of domestic services is increasing at a faster rate, indicating a concerning trend of persistent inflation. He stated that there might be a need for further monetary policy tightening to ensure inflation returns to target in a reasonable timeframe, depending on how the economy and inflation evolve.

Taking control of finances with the help of a financial advisor

In light of these developments, it is advisable for individuals to seek the assistance of a financial advisor. A financial advisor can help assess their current financial situation, identify areas of risk and suggest ways to mitigate it. 

They can also help individuals manage their debt, create a budget and plan for their financial future. With their expertise and guidance, individuals can take control of their finances and prepare for any challenges that may arise due to changes in interest rates.

BloomWealth is a team of trusted and highly-skilled financial planners based in Sydney.

We can help you take control of your financial future and fulfill your true potential. Get in touch with us to ensure you are equipped with everything you need to make informed financial planning decisions.

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